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Russia is complying 100% with the OPEC+ production cut quota, according to Alexander Novak, who spoke to Rossiya-24 television on Wednesday, Russian news agency Tass reported.
“We are at a high level. In July, we fulfilled 97% of our level. This is a high figure for us. We have attained 100% in August. As of today, we are fulfilling 100% of the obligations we assumed in August,” Novak claimed.
Novak also claimed that the oil market is close to balancing itself. Meanwhile, Saudi Arabia’s energy minister Prince Abdulaziz said that global oil demand would recover by the end of the year.
According to Novak, OPEC+ has “practically reached the results” that it set out to reach in balancing the market, with oil demand recovering to 90% of the pre-covid-19 level.
The balancing was, in part, attributed to supply being a million barrels per day lower than demand, Novak said.
While Novak’s words were positive for the market, he went further to say that OPEC+ could relax its cuts earlier than planned if things start to look better—particularly if there turns out to be no second wave of the coronavirus.
“We will have every opportunity to make decisions, namely if the market will be overheating, we will have the opportunity to reduce quotas faster,” Novak added.
Even though the market is surely eyeing a quicker rebalancing as a favorable scenario, it may very well view Novak’s comments about relaxing the group’s production cuts sooner than anticipated as bearish.
Oil prices have remained rangebound over the past month or so despite the stellar performance of OPEC+ because oil demand has not yet snapped back to pre-covid 19 levels. Without that resurgence of demand that remains stymied due to the coronavirus, the market will continue to eye any OPEC+ pullback with a healthy dose of skepticism.
Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.